Correlation Between Block and Iodm

Can any of the company-specific risk be diversified away by investing in both Block and Iodm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Block and Iodm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Block Inc and Iodm, you can compare the effects of market volatilities on Block and Iodm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Block with a short position of Iodm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Block and Iodm.

Diversification Opportunities for Block and Iodm

-0.56

Correlation Coefficient

Block  Iodm

Excellent diversification

The 3 months correlation between Block and Iodm is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Iodm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iodm and Block is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Block Inc are associated (or correlated) with Iodm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iodm has no effect on the direction of Block i.e., Block and Iodm go up and down completely randomly.

Pair Corralation between Block and Iodm

Assuming the 90 days trading horizon Block Inc is expected to generate 0.73 times more return on investment than Iodm. However, Block Inc is 1.37 times less risky than Iodm. It trades about 0.15 of its potential returns per unit of risk. Iodm is currently generating about -0.08 per unit of risk. If you would invest  11,032  in Block Inc on October 25, 2024 and sell it today you would earn a total of  3,062  from holding Block Inc or generate 27.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Block Inc  vs.  Iodm

Block Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Block unveiled solid returns over the last few months and may actually be approaching a breakup point.

Iodm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iodm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Block and Iodm

The main advantage of trading using opposite Block and Iodm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block position performs unexpectedly, Iodm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Iodm will offset losses from the drop in Iodm's long position.

The idea behind Block Inc and Iodm pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.